Three current and former financial regulators told Congress Thursday that they made fateful mistakes that helped drive the global financial system to the brink of disaster, and urged Congress to fill the regulatory gaps.

"We have learned that voluntary regulation does not work," said Christopher Cox, chairman of the Securities and Exchange Commission, in testimony on Thursday at the House Oversight and Government Reform Committee. "It was a fateful mistake" that no one was given the authority "to regulate investment bank holding companies other than on a voluntary basis."

Former Federal Reserve Chairman Alan Greenspan . . . said, he and others are in "a state of shocked disbelief" that "counterparty surveillance" failed. He said he still doesn't fully understand what went wrong.

***Greenspan said he favored strengthening the regulatory structure.

Bloomberg writes that Greenspan conceded to a "flaw" in his market ideology, and confessed his mistakes regarding derivatives:

Greenspan said he was "partially'' wrong in opposing regulation of derivatives and acknowledged that financial institutions didn't protect shareholders and investments as well as he expected.

Greenspan's admission might not sound very dramatic at first glance. But for a guy who is known for his cryptic mumblings and for rationalizating his own actions, this is his way of saying "we broke it, now someone's got to fix it".

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